BEHIND THE WHEEL

Zambia 2014 | MINING, ENERGY & INDUSTRY | INTERVIEW

TBY talks to John Connell, CEO of Toyota Zambia, on the company's share of the Zambian new vehicle market, the impact of second-hand vehicle imports, and how road infrastructure improvements will impact consumer demand.

John Connell
BIOGRAPHY
John Connell attended the Francis Douglas Memorial College in New Plymouth, New Zealand before going on in to receive an Engineering Mechanics Certificate from the Royal NZ Navy, including special qualifications as a fitter welder, marine diesel mechanic, and diver in 1974. He later attended the Toyota Management Program at the Potchefstroom University, Post-Graduate School for Management, South Africa in 1991. Before becoming CEO of Toyota Zambia in 2012, Connell worked as Toyota’s Managing Director in Jamaica from 2006 to 2012. Prior to that he held a number of other positions, including General and Project Manager for Toyota in Malawi and Swaziland.

What was Toyota's performance like in Zambia in 2013?

We are the market leaders. Around 50% of the new vehicles that are sold in Zambia are made by Toyota. In 2013, we maintained our market share, but unfortunately the market is declining. New vehicle sales are declining because of the huge unregulated influx of second-hand vehicles into the country. That has a negative impact on our business.

How are you coping with this situation in order to compete with the second-hand market?

The average age at time of import for second-hand vehicles that are coming into our market is in excess of 10 years old. Hence, we have been lobbying the government to regulate the industry. At the moment, you can buy a car of any age, in any condition, and bring it into Zambia. There is no regulation of this whatsoever. This is why there are many accidents on our roads. A considerable number of them can be attributed to old vehicles that are not maintained properly; they are run in poor condition, overloaded with people, and have worn tires and other substandard parts.

What kind of change in the regulations would you like to see to have a more competitive market?

We need an age limit on second-hand imported vehicles. For example, setting a five to six year age limit for imported second-hand cars, as our neighbors do, would be enough. If the industry was regulated, Zambia could have its own second-hand car industry, and we would look at trade-ins. We would be able to give our customers a choice by importing vehicles under five years of age. I think regulating the industry and putting an age limit on vehicles will not only help our country to develop, but will also create business opportunities for Zambians. We would ensure that whatever we bring in and sell, whether on operational lease or second hand, will have a warranty. Toyota Zambia employs 230 people, and we have to spend a lot of money on training and equipment to provide a world-class service to our customers. We are also responsible for corporate social responsibility (CSR) within the country, and we hope Zambia develops a supportive government for its people. However, if the situation remains unregulated, my concern is that we will not have the money to spend on CSR, and we will not be able to support the government by providing jobs.

How many second-hand vehicles are sold a month in Zambia, and how many cars does Toyota sell a year in Zambia?

Around 5,000 second-hand vehicles are sold monthly in Zambia; in comparison, total new vehicle sales are around 4,500 units annually. Toyota estimates the total vehicle park in Zambia to be around about 500,000 units.

How will the new roads benefit your business?

Obviously, the roads will make our business important, although it can also have a downside. One of our top-selling vehicles is the Hilux, a pickup truck. That model accounts for probably around 70% of our sales. Once the government has fixed all the roads, people will not need pickups. We saw this happen in Angola. In Angola, we had a 44%-45% market share. Once the roads were fixed, Toyota's market share dropped to 30%. We have the emergence of sedans now, and we have ensured we have a range of those vehicles available for the customers to choose from.

Are you planning to sell new vehicles in Zambia now that the road network is being improved?

I see a move not to a sedan type of vehicle, but rather to sport utility vehicles (SUVs), of which we will ensure we have a full range available. We already have the Toyota RAV, but will have to make sure we have enough production within that range of vehicles. We are now working in combination with the manufacturers and speaking to our principals to inform them about this trend.